1. This second appeal raises the question as to the correct principles applicable in determining the quantum; of damages to be given to a dismissed employee on a finding that the dismissal is wrongful. The respondent, when he was acting as the secretary of the appellant bank, was, by an order of the latter dated 5-4-1958, dismissed from service. Though he applied under Section 41 of the Madras Shops and Establishments Act, 1947, he did not pursue that remedy. He instituted the suit, out of which this second appeal arises, for a declaration that the order of dismissal was illegal and that he was entitled to reinstatement with all his rights and privileges, and for recovery of a certain specified sum apparently as arrears of salary. Alternatively, he also asked for damages for wrongful dismissal. That the respondent's dismissal from service was wrongful is no longer in question In this court. Both the courts below held that the respondent was entitled to damages for wrongful dismissal but the lower appellate court on appeal by the respondent practically doubled the quantum of damages awarded by the trial court. The appellant-bank contends that while it does not dispute the quantum of damages awarded by the trial court, the enhancement thereof by the lower appellate court is contrary to principle and is unjustifiable.
2. The respondent himself valued the damages for wrongful dismissal at Rs. 2000. But he claimed what he called overall damages at Rs. 4109 including back wages. The trial court considered that one year's salary at Rs. 154 per mensem was a proper measure of damages to be awarded to the respondent. The lower appellate Court, on the other hand, has stated that in its view the clear legal effect and implication of a wrongful dismissal is that the respondent was entitled to damages for wrongful dismissal "measured by the arrears of back-pay, till the date of plaint."
It, therefore, allowed further damages equivalent to the salary, which the respondent would have drawn had he continued in service between the date of dismissal and the date of plaint. This view the lower appellate court formed on the basis of two decisions of this court in Balasundara Mudaliar v. Ellappa Mudaliar, 1957-1 Mad LJ 7 and Dhandapani v. Salem Co-operative Wholesale Stores Ltd., 1959-1 Mad LJ 108, which were cases in which the employee had obtained orders in his favour Under Section 41 of the Shops and Establishments Act, 1947. I shall presently refer to these decisions.
3. Where an employment is contractual and the terms of which provide or do not provide for the manner of termination of service, the principles for assessing damages to be awarded for wrongful dismissal are not in doubt. The basis of damages in such cases is breach of contract of service either because the stipulated notice was not given for termination or in the process of termination, the requisite procedure, has not been followed. Where the contract provides for the manner of termination, as for instance, a month's notice or a month's pay in lieu of such notice, normally that will be the measure of damages. But in addition to that, on account of the fact that the employee has been wrongfully dismissed from service, the time that may probably be taken and the reasonable chance of getting re-employment should also be kept in view. Where the contract did not provide for the manner of termination, a reasonable period of notice or pay in lieu of such notice would be a basis, together with the additional factor I have mentioned for assessing damages. There may be exceptional cases where other circumstances may well enter into the computation of the quantum of damages, as for instance, employment in a specialised department in which case alternative employment will be difficult to get.
4. Under the common law of Master and Servant, the principles for determining the measure of damages are succinctly stated by Chitty on Contracts thus:
"They are to be assessed by reference to the amount earned in the service wrongfully terminated and the time likely to elapse before the servant obtains another post for which he is fitted. If the contract expressly provides that it is terminable upon e.g., a month's notice, the damages will ordinarily be a month's wages . No compensation can be claimed in respect of the injury done to the servant's feelings by the circumstances of the dismissal nor in respect of extra difficulty of finding work resulting from those circumstances. A servant who has been wrongfully dismissed must use diligence to seek another employment and the fact that he has been offered a suitable post may be taken into account in assessing the damages."
To the same effect is the law stated in 25 Halsbury's Laws of England 523 (Simonds Edn.) These principles have been applied in cases like this decided by the Indian High Courts. In Satyendra Kumar v. Dist. Board of 24 Parganas,, a Division Bench of the Calcutta High Court opined that the compensation payable to a sub-overseer would be equivalent to the monthly salary and allowance payable to him for a period of three months. The learned Judges noticed that there was no statutory rule, framed by the District Board, as to what should be the period of notice of discharge. They then proceeded to assess the damages in the; following manner:
"Therefore if the plaintiff was to be discharged he would be entitled to reasonable notice'. Since we hold that the dismissal of plaintiff was wrongful we are to act by the standard of compensation that would have been payable to the plaintiff appellant, if instead of being dismissed he would have been discharged on notice. In a case similar to the present one, reported in
Prabhulal Upadhyaya v. Dt. Board of Agra,
AIR 1938 All 276, it was held that in ordinary circumstances, a person of the plaintiffs position would be entitled to three months' notice, terminating his employment, because such period would be sufficient to enable the plaintiff to obtain other employment and earn his previous salary."
5. It is clear from this case that the Court applied two principles in assessing damages, namely (1) the reasonable period of notice or pay and allowances due for that period and (2) the reasonable expectation in ordinary circumstances of re-employment. In Thomakutty v. Thomas, AIR 1954 Trav Co 104, it was pointed out that a servant complaining of wrongful dismissal could not claim the entire amount of anticipated salary covering the whole period for which he expected to continue in service so as to utilise such amount for safe investment and thus to convert the very injury complained of into a blessing in disguise and that that common law which recognised his right to recover damages for wrongful dismissal imposed a; corresponding duty on him to do all that was possible to mitigate such damages. Therefore the learned Judges considered that the possible chance of obtaining a suitable1 employment elsewhere had to be taken into account in assessing the measure of damages. The learned Judges went on to say:
"Even where the service is not covered by a contract, the rule is that the service can be terminated only after reasonable notice, except in cases where the dismissal is for proved misconduct or for other justifiable causes. The, period of such notice will ordinarily be fixed at the time during which a fresh employment may reasonably be expected to be obtained. Therefore the real point for consideration should be whether the plaintiff made all1 diligent attempts to get an employment similar to the one he had."
It was considered in that 'case that as the, plaintiff was, not diligent enough in endeavouring to obtain a post elsewhere similar to the one he had held, the reasonable " period within which he could have normally obtained a similar job elsewhere would be one year. Subrahmanyam, J. in Mohana Krishna Naidu v. National Bank of India Ltd., , gave nine month's pay as damages for wrongful dismissal.
6. The decided cases show that no mathematical' accuracy is possible in the matter of assessment of damages for wrongful dismissal. Speaking broadly the quantum, of damages will have to be ascertained in each case applying the principles noticed above.
7. In the instant case, it does not appear that the contract of service stipulated any period of notice for termination; nor has the respondent established that he made any attempts to get re-employment elsewhere and that on account of the blame or stigma arising out of wrongful dismissal, he could not get re-employment over any stated period. The employment in which the respondent was engaged could in no sense be described as of a specialised category. No evidence has been let in to show the reasonable period within which re-employment could have been secured. In those circumstances, the trial Court, I think, found in a liberal way that the proper damages would be 12 months' salary.
8. The lower appellate Court, as I said, relied however on two cases decided by this Court, namely, 1957-1 Mad LJ 7 and 1959-1 Mad LJ 108., Those two cases are distinguishable because they proceeded upon the view that the effect of an order Under Section 41 (1) of the Madras Shops and Establishments Act in favour of an employee was as if he was not terminated from service and that this should" be taken into account in a suit brought by him for recovery of arrears of salary. Whatever be the position in such cases, in my opinion, where an employee comes to Court complaining of wrongful dismissal from service and the employment was contractual and gets a declaration as prayed for, the effect of the decree is not that the employee should be treated as never having been dismissed but continuing in service. It follows, therefore, that the basis for computation of the measure of the quantum of damages adopted by the lower appellate Court is erroneous. On behalf of the respondent, my attention was invited to S.S Shetty v. Bharat Nidhi Ltd. ., . That was a case arising under the Industrial Disputes Act and the question there related to the quantum of compensation to be given to an employee who was entitled to reinstatement but nevertheless there was no order of reinstatement. The compensation in such a case, as the Supreme Court pointed out, is not determined on the basis of breach of contract unlike in the present case. This decision, therefore, does not in any way assist the respondent.
9. The damages awarded by the trial Court are proper and appropriate and enhancement allowed by the lower appellate Court cannot be supported.
10. The second appeal is allowed and the judgment and decree of the lower appellate Court in so far as they enhanced the damages awarded by the trial Court are hereby set aside. No costs. No leave.